FXNC - First National Corporation to Acquire Touchstone Bankshares Inc. | Benzinga
STRASBURG, Va. and PRINCE GEORGE, Va., March 26, 2024 (GLOBE NEWSWIRE) -- First National Corporation ("First National") (NASDAQ:FXNC) and Touchstone Bankshares, Inc. ("Touchstone") (OTCPK: TSBA) announced today they have entered into a definitive merger agreement for First National to acquire Touchstone in an all-stock transaction.
The combined company will bring together two community banks with a deep commitment to the customers and communities they have each served since the early 1900s. Total assets are expected to be approximately $2.1 billion, with $1.5 billion in loans, $1.8 billion in deposits, thirty branch offices across Virginia and two branches in North Carolina. The resulting company is expected to be the ninth largest Virginia community bank as ranked by deposits. First National expects the transaction to be approximately 36% accretive to earnings per share with an estimated earn-back period for tangible book value dilution of approximately 3.0 years.
Commenting on the announcement, Scott Harvard, President and Chief Executive Officer of First National Corporation, said, "We are thrilled to have found a partner with an equally long history of serving and supporting local customers and businesses in their communities. Combining our companies will help ensure that we continue to be part of the fabric of the communities we serve, which we believe enables us to deliver superior service and financial performance. We are incredibly excited about this opportunity to expand our Richmond metro presence with the addition of seven branches in the market, and we look forward to welcoming the entire Touchstone team into the First Bank family."
Strategic and Financial Benefits of the Proposed Merger
Expansion of Richmond Metro Presence: The combined company's deposits in the Richmond area are expected to exceed $350 million with eight branches serving the market.
Significant Cost Synergies: Estimated cost savings of the combined company are approximately $7.2 million or 35% of Touchstone's noninterest expense.
Enhanced Scale and Profitability: The greater scale will enable larger loan relationships and improved efficiency across the organization.
Best in Class Deposit Base: Both banks are well positioned with low cost, long duration deposits because of their century-long engagement in their respective markets.
Strong Cultural Alignment: Both companies offer a "people first" culture with a deep commitment to the communities they serve.
Under the terms of the agreement, Touchstone shareholders will receive 0.8122 shares of First National stock for each share of Touchstone stock. Based on First National's closing stock price of $17.55 as of March 22, 2024, this equates to an aggregate deal value of approximately $47.0 million, or $14.25 per share of Touchstone stock.
Founded in 1906 as The Bank of Dinwiddie, Touchstone Bank currently operates twelve banking locations in and around Richmond, south-central Virginia, and northern North Carolina. As of December 31, 2023, Touchstone reported total assets of $658.7 million, gross loans of $508.8 million and total deposits of $542.2 million.
James Black, President and Chief Executive Officer of Touchstone, stated, "First National is a like-minded partner that shares our culture of supporting our communities by focusing on building meaningful relationships and personalized service to their customers. We are enthusiastic about the opportunity to partner with First National in a transaction that we believe offers significant opportunities to our clients, communities, employees, and shareholders. This partnership is an excellent opportunity to create value for both institutions."
The merger agreement has been unanimously approved by the boards of directors of each company. The transaction is expected to close in the fourth quarter of 2024, subject to approval of both companies' shareholders, regulatory approvals, and other customary closing conditions.
First National and First Bank will ...